Starting a business takes a lot of work - you have to figure out financing, the location for your business, and a legal structure for you business. You also need to determine all of your tax obligations - federal, state, and local - and the different permits, licenses, and any other pertinent documents that are required of a business such as yours. Luckily, you've come to the right place. FindLaw's Business Formation Resources section provides numerous resources to help small business owners incorporate or create another legal structure for their business. Resources include sample legal forms, tax information from the Internal Revenue Service (IRS), and do-it-yourself business formation packages for purchase. You can also find various state-specific information and resources to help you make sure you comply with the laws of your state.
Articles of Incorporation
In order to form a corporation, a business must draft and file articles of incorporation with the state that will serve as the business's principal location. Although the contents of the articles of incorporation will vary depending on the state, there are some similarities among the states. Generally, articles of incorporation must include the following information:
- The corporation's name and the address of the principal location.
- The corporate purpose, which can (and should) be a broad statement.
- The name and address of the corporation's registered agent - this is the person who is authorized to accept legal documents on the behalf of the corporation.
- Stock information, such as the number of shares the corporation is authorized to issue, the value of each share, and the classes of shares.
Other pertinent information can be included in the articles of incorporation, such as the initial directors. Many states provide pre-printed articles of incorporation on their Secretary of State website.
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The taxes that your business will be obligated to pay will depend on the legal structure of your business. Sole proprietorships, partnerships, and limited liability companies (LLCs) are generallly subject to pass-through taxation, meaning the business is not taxed separately, but rather the income and expenses "pass through" to the owner and are included on his or her individual tax return. Please keep in mind that businesses that qualify for pass-through taxation still have to pay employment taxes for any employees, as well as other taxes such as property taxes.
Corporations, on the other hand, can be taxed as a separate entity or can have pass-through taxation. The tax status of the corporation will depend on if it is a C or S corporation. A C corporation is the most common type of corporation because a corporation must meet certain qualifications in order to form an S corporation. A C corporation is subject to double taxation - it is taxed on its profits and then shareholders are taxed on the dividends they receive. Finally, if you decide to start a nonprofit organization, whether it is incorporated or unincorporated, you will receive tax exempt status. However, there are certain criteria you must meet initially (and continue to meet) in order to receive nonprofit tax-exempt status.
Start Your Business Right
The resources provided in this section can help guide you in starting your business, but make sure you research the laws of your state to confirm that you are in compliance with all applicable laws.
The DIY business formation service we offer has done much of the research for you - all you need to do is answer some questions and we'll help you determine your business structure and ensure you have taken the steps necessary to form your business legally in your state.
A business organizations attorney can also help answer any questions you may have about starting and running a small business.